Both the government and the Life Insurance Corporation (LIC) intend to sell their entire stake in the IDBI Bank clarified the Department of investment and public asset management (DIPAM).
A report by Economic Times said that as per the SEBI guidelines, the sale may occur through the open-offer route however the quantum is likely to be decided before the request for proposal (RFP) stage. However, the Cabinet Committee of Economic Affairs (CCEA) has given its nod to the government and LIC to sell their entire stake in IDBI Bank along with a transfer of management said DIPAM.
The department said that along with the transfer of management control, there will be divestment of GoI and LIC shareholding in IDBI Bank. The department said that as per SEBI regulations, the open letter can be triggered.
The Current Shareholding
With non-promoters shareholding at 5.29%, the government currently holds 45.5% stake and LIC has 49.24% of IDBI, which is listed as a private bank by the RBI.
In the month of May itself, Union Cabinet gave approval to the stake sale.
A single transaction advisor would oversee the whole process as LIC and government’s shares would be sold at the same time, said DIPAM in response to queries from transaction advisors
DIPAM said that “It (stake to be sold) will be determined, as we go through the transaction and ascertain investors’ interest, market appetite etc. It is clarified that LIC’s stake will be sold along with GoI’s shareholding in this transaction”.
Bids Invited From Various Stakeholders
Last month, the financial framework invited bids from commercial consultants and legal firms to manage and advise on the sale and transfer of IDBI Bank’s corporate ownership. According to the PTI, in terms of eligibility process, bidders were required to recommend at least one disinvestment transaction / strategic transaction / M&A operations / private transactions amounting to Rs 5,000 crore or more during the period from April, 2016 to March, 2021.
Finance Minister Nirmala Sitharaman had said in her Budget speech of 2021-22 that the entire process of stake sale of IDBI Bank would be completed in the current fiscal itself.
The government set itself an ambitious disinvestment target of Rs 1.75 lakh crore in the current fiscal year. Out of this target, Rs 1 lakh are expected to be realised from selling government stake in state-owned banks and financial institutions while Rs 75,000 crore are expected from offloading ownership of CPSE.
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